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Jul 18, 2019
, Bloomberg News
(Bloomberg) -- The plunge in dollar bonds of two Indonesian speculative-grade issuers is raising the risk of contagion for other lower-rated borrowers from the nation.
Securities from Indonesian property firms such as Jababeka International, Alam Sutera and Modernland Overseas Pte slid on Thursday morning, data compiled by Bloomberg show.
That’s after a bond from another property company -- APL Realty Holdings -- sank as much as 20 points on a credit downgrade of its parent, and debt sold by a subsidiary of textile manufacturer Duniatex Group plunged this week. That Delta Merlin Dunia Tekstil note sold in March plummeted nearly 70 cents on the dollar after an affiliated company missed a loan payment.
“We have seen contagion from Delta Merlin Dunia Tekstil’s debt problems spreading in Indonesia high yield,” said Owen Gallimore, head of credit strategy at Australia & New Zealand Banking Group in Singapore. “The company’s debt woes have sparked a short term corporate governance panic.”
Indonesia is poised to cut interest rates for the first time in two years Thursday as the economy is facing dimming prospects, and policy makers come under pressure to join counterparts in the rest of Asia to reduce borrowing costs. While it is too early to call the impact of recent bond declines at individual companies for the wider market, analysts and investors have started to highlight weaknesses in the market amid record speculative-grade bond issuance in Asia this year.
Officials at Duniatex and APL Realty parent Agung Podomoro weren’t available for comment.
These are some the securities that have fallen this morning, according to Bloomberg-compiled prices:
To contact the reporter on this story: Denise Wee in Hong Kong at dwee10@bloomberg.net
To contact the editors responsible for this story: Andrew Monahan at amonahan@bloomberg.net, Finbarr Flynn
©2019 Bloomberg L.P.
